2009 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 7-16-2009 

# U SA v . B l a ck P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 07-3285

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Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

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w . vi ll anova . e du . Re c omme nde d C it at ion " U SA v . B l a ck " (2009). 2009 D e cisio n s . P ape r 992. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2009/992NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N o. 07- 3285 UNI TE D ST ATE S OF AM ERI CA

v. DE BO RA H B L AC K,

A ppel l ant O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e M id d le D istric t o f P e n n sy lv a n ia D . C . C r i m i nal N o. 06- cr - 0336 ( H onor abl e Sy l vi a H . R ambo) Subm i tt ed Pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

A pr i l 20, 2009 B e f o re : S C IR IC A , C hi ef

Judge , S L O V IT E R a n d F IS H E R , C i r cui tJudges . ( Fi l ed: J ul y16, 2009) OPI NI ON O F THE COURT S C IR IC A , C hi ef

Judge . O n O ct ober24, 2006, D ebor ah B l ack pl eade d gui l t yt o fr aud aga i ns tthe U ni t ed S t a t e s De p a r t me n to f

Ho u s i n g a n d Urb a n De v e l o p me n t( HUD ) , i n v i o l a t i o n o f 1 8 U. S . C.She pl eade d gui l t yt o cr i m i nal act i ons cont i nui ng fr om atl eas tas ear l yas M ar ch 1 1998, unt i l O ct ober5, 2006. Pr es ent ence I nves t i gat i on R epor t( PSR ) ¶ 1. T he D i s t r i ctC our thas j ur i s di ct i on under18 U . S. C . § 3231. W e have j ur i s di ct i on 2 u n d e r 2 8 U .S .C . § 1 2 9 1 . 2 §§ 1010 and 2. She w as s ent ence d t o s erve a 12- m onth t erm of i m pr i s onm entand a 1- 1 y e a r te rm o f

su p e rv ise d re lea se , to p a yre stitu tio n in th e a m o u n t o f $ 5 1 1 ,2 5 1 .5 6 a n d to p a ya s p e c i a l a s s e s s me n to f $ 1 0 0 . Bl a c k a p p e a l e d h e rs e n t e n c e a n d we wi l l a f f i r m. 2 I . B la c k w a s a m a n a g e r a t S u n s e t M o rt g a g e C o m p a n yo f f ic e in Y o rk , P e n n s y lv a n ia . S h e f re q u e n tlyw o rk e d w ith E a rl G in ter , D a v id W a lsh , an d R o n a ld F u rth , w h o b o u g h t, re f u rb ish e d a n d th e n re so ld h o u se s in th a t ar e a o f P e n n sy lv a n ia. G in ter , W a lsh a n d F u rth u se d B lac k to se c u re m o rtg a g e lo a n s f o r b u y e rs w h o m ig h t b e a b le to q u a lifyf o r f e d e ra lly funded mort gages t hr ough H U D . A ppel l ee’ s B r . 6. B l ack c ons i s t ent l yvi ol at ed the r equi r ement s of the Feder al H ous i ng A dm i ni s t r at i on A gency203( b) i ns ur ed mort gage p ro g ra m . T h is f

e d e ra llyf

u n d e d m o rtg a g e in su ra n c e p ro g ra m a llo w s c e rta in a p p lica n ts to r ece i ve 100% of thei rdow n paym entforthe home pur chas e as a gi ft . T he r egul at i ons of t h e p r o g r a m p r e c l u d e t h e s e l l e ro f t h e p r o p e r t yf

r o m b e i n g th e g i f

td o n o re x c e p ti n two ci r cumst ance s : fi r s t , i f a w ai veri s r eques t ed fr om H U D ors econd, i f the s el l erpr ovi des t he funds i n ques t i on i n addi t i on t o a pr oces s i ng fee t o a cha r i t abl e non- pr ofi t501( c) ( 3) o rg a n iz a tio n w h o th e n re -g if t th e f u n d s to th e p u rc h a s e r. See W i t hdr aw al of Pr opos edT he D i s t r i ctC our tappl i ed the gui del i nes i n eff ectatthe t i m e of s ent enci ng and 3 ad o p ted th e los s ca lculati o n b ase d o n the s ale p ri ce s at th e f o rec losu re sa les. T h e c o u rt al s o gr ant ed a dow nw ar d departur e bec aus e the s er i ous nes s of B l ack’ s offe ns e w as over s t at ed w i t h r egar d t o t he amountof l os s i n compar i s on t o B l ack’ s ow n per s onal f in a n c ia l g a in . 3 R ul e on Sour ces of H om eow nerD ow npaym entPur s uantt o Sect i on 203 of the N at i onal H o u s in g A c t, 6 6 F e d . R e g . 2 8 5 1 (J a n . 1 2 , 2 0 0 1 ). O vert he cour s e of e i ghty ear s , B l ack w oul d i nform G i nt er , W al s h, and Fur t h w hen a pot ent i al buy erneede d a gi ftei t hert o payoff de bt s ort o m ake a dow n paym enti n or der t o secure t he g ov ernm ent- i nsured m ort gag es. PSR ¶ 5. B l ack w oul d t hen pr ovi de the s el l er s w i t h a for ged “gi ftl et t er ” s o the s el l er s coul d pr ovi de the funds t o t he buy er s but m a k e it l o o k a s th o u g h th e f u n d s c a m e f

ro m a f rie n d o r a re lativ e a s a leg iti m a te g if t in c o m p lia n c e w ith th e f

e d e ra lly f

u n d e d p ro g ra m . I

d. Sever al of thes e buy er s defa ul t ed on t hei rl oans , caus i ng s ubs t ant i al l os s t o H U D i n t he amountof $511, 251. 56. PSR ¶ 6. 3 B l ack r ai s es t hr ee i s s ues on appea l : ( 1) w hetherthe s ent ence i m pos ed vi ol at es t he E x PostFact o C l aus e of the C ons t i tut i on, U . S. C ons t . ar t . 1, § 9, cl . 3, byus i ng the 2005 U n ited S tate s S e n ten c in g G u id e lin e s (U .S .S .G .) in ste a d o f th e 2 0 0 0 U .S .S .G . to c a lcu late i t s r ange; ( 2) w hethert he D i s t r i ctC our terr ed i n cal cul at i ng the amountof l os s ow ed by B l ack, affect i ng bo t h the am ou nt of r est i tuti on she m ustpayand al so her gu i deli nes baseT he amountof l os s at t r i but ed t o B l ack i s cr i t i cal t o t he det erm i nat i on of heri ni t i al 4 gu i deli ne calcul at i on , as i tw i l l be incr eased i ncrem ental l yw i t h the i ncrease i n the l oss a ttr ib u ta b le to h e r. U

ni t ed Stat es v. Feldm an , 3 3 8 F .3 d 2 1 2 , 2 1 5 (3 d C ir . 2 0 0 3 ). W e r evi ew t he D i s t r i ctC our t ’ s i nt erpr et at i on of the s ent enci ng gui del i nes de novo. 5 U nited S tates v. L an gford , 5 1 6 F .3 d 2 0 5 , 2 0 9 (3 d C ir . 2 0 0 8 ). B l ack doe s notdes cr i be exa ct l yw hatamendm entcr eat ed thi s cons t i tut i onal err orbut 6 s i m pl ycont ends t hat“i tr es ul t ed i n an adj us t ed off ens e l evel of tw enty( 20) ver s us an off ense l evel of si xteen ( 16 ) under t he 2 00 0 G uidel i nes (orl ow er i f B l ack’s l oss (c o n tin u e d ...) 4 o ff en se lev el; an d (3) w h ethe r th e D istri ct C o u rterred in f ail ing to g ran t a do w n w ard 4 departur e under2005 U . S. S. G . § 5K 2. 0. II. A s a gene r al rul e, cour t s m us tconductthei ri ni t i al advi s orygui del i ne ca l cul at i on w ith th e g u id e lin e s in e f f e c t a t th e tim e o f

s e n te n c in g , n o t a t th e tim e o f th e c ri m e . U

ni t ed Stat es v. W

ood , 486 F. 3d 781, 790 ( 3d C i r . 2007) . E x PostFact o C l aus e pr obl ems m ay 5 ar i s e w hen the gui del i nes i n eff ectats ent enci ng ar e more s ever e than thos e i n eff ectw hen t he cr i m e w as comm i t t ed: “[i ] f the courtdet erm i nes thatthe us e of the G ui del i nes M anual i n eff ecton t he dat e thatt he def endanti s s ent ence d w oul d vi ol at e the ex p o st fa c to cl ause of the U ni t ed St at es C ons t i tut i on, t he courts hal l us e the G ui del i nes M anual i n eff ecton th e d a te th a t th e o f

f e n s e o f c o n v ic tio n w a s c o m m itte d .” 2 0 0 5 U .S .S .G . § 1 B 1 .1 1 (b )( 1 ). B l ack c ont ends t he 2005 U . S. S. G . cont ai ned pos t - offe ns e amendm ent s that r e q u i r e d a mor e s e v e r e s e n t e n c e t h a n th a tp r e s c r i b e d b yth e 2 0 0 0 U. S. S. G. , c r e a t i n g Ex P o s tF a c t o c o n s t i tu t i o n a l e r r o r s . Ap p e l l a n t ’ s Br . 1 . Ap p l i c a t i o n No t e 2 o f 2 0 0 5 U. S . S . G. 6( . . . cont i nued) 6 c a lcu latio n w a s c o rre c t).” A p p e llan t’s B r. 1 . T h e G o v e rn m e n t co n ten d s th a t th is w o u ld h a v e m a d e th e o f

f e n s e le v e l 1 3 in s te a d o f 1 7 . A p p e lle e ’s B r. 1 1 . “W e r evi ew t he fa ctual det erm i nat i ons under l y i ng the appl i cat i on of the Sent enci ng 7 G ui del i nes forcl earerr or , butw e have pl enaryr evi ew overthe l egal det erm i nat i ons . ” Feldm an , 338 F. 3d at219. “[W ] e exe r ci s e pl enaryr evi ew overw hetheran aw ar d of res t i tuti on i s perm i t t ed u nd er l aw , bu tw e revi ew speci fi c aw ards of res t i tuti on for abu se of di s cr et i on. ” I

d. ( i nt ernal quot at i on m arks and ci t at i ons om i t t ed. ) . “I f the di s t r i ct c o u r t ’ s a c c o u n to f

t h e e v i d e n c e i s p l a u s i b l e i n l i g h to f th e r e c o r d v i e w e d i n i t s e n t i r e t y, t he courtof appe al s m aynotr ever s e i t . . . . W her e ther e ar e tw o perm i s s i bl e vi ew s of the evi dence , t he fa ct fi nder ’ s choi ce be t w een them cannotbe cl ear l yerr oneous . ” A nders on v . C ity o f B e ss e m e r C ity , 4 7 0 U .S . 5 6 4 , 5 7 3

– 7 4 (1 9 8 5 ). 5 § 1B 1. 11 s t at es t hat“the l as tdat e of the off ens e of c onvi ct i on i s the contr ol l i ng dat e for ex pos tf act o purpos es . ” B l ack pl eade d gui l t yt o H U D fr aud fr om atl eas tas ear l yas M ar ch 1998 thr ough O ct ober5, 2006. PSR ¶ 1. A s a gui l t ypl ea i s an admi s s i on the defe ndant“comm i t t ed the cr i m e cha r ged aga i ns thi m , ” N orth C aroli na v. A l

f ord , 40 0 U. S. 2 5 , 3 2 (19 7 0 ), B lack ’s ad m issi o n o f f rau d thro u g h 2 0 0 6 is suf ficien t fo r th e D istri ct C o u rt t o appl yt he 2005 edi t i on of the G ui del i nes . A ccor di ngl y , no ex pos tfac t o pr obl em ar i s es b ya p p lyin g th e 2 0 0 5 g u id e lin e s to B la c k ’s s e n te n c e . III . B lac k ’s s e c o n d iss u e o n a p p e a l is th e a m o u n t o f lo ss f o r w h ich sh e is b e in g h e ld r es pons i bl e. B l ack c ont es t s bot h t he amountof l os s i ncl uded as partof hergui del i nes

7 cal cul at i on and the ac tual r es t i tut i on aw ar d i m pos ed bythe D i s t r i ctC our t . “[L] os s under the S en tenc ing G u idelines is th e g rea ter of the a ctua l l o ss ca u sed b ythe d ef en d an t’ s i l l egal act i ons ort he amountof l os s the def endanti nt ended t o caus e. ” Feldm an , 338 F. 3dO n r emand, t he di s t r i ctcour tfound the exe m pt i ons w er e notpr operand had c aus ed 8 a c tu a l lo s s . See U

ni t ed Stat es v. Feldm an , 2 0 0 4 W L 1 9 6 4 9 1 0 (E .D . P a . 2 0 0 4 ). 6 at215. H ow ever , “a r es t i tut i on aw ar d can onl ybe bas ed upon ac tual l os s . ” I d. a t 2 1 6 . T he G overnm entbear s t he bur den of e s t abl i s hi ng, bya pr eponder ance of the evi dence , th e a m o u n t o f

th e lo s s . See U

ni t ed Stat es v. Ji m enez , 5 1 3 F .3 d 6 2 , 8 6 (3 d C ir . 2 0 0 8 ). B lack co n tend s tha t un d er Fe ldm a n , actual l os s i s det erm i ned by“compar [i ng] w h a ta c tu a l l y h a p p e n e d w i t h w h a tw o u l d h a v e h a p p e n e d ” i f B l a c k h a d a c t e d l a w f

u l l y. 338 F. 3d at221. A ccor di ng t o B l ack, the cr i m e s he comm i t t ed had no e ffe cton t he a m o u n t o f

m o n e yH U D u lti m a telylo st b e c a u se th e lo a n s c o u ld h a v e b e e n m a d e law f u lly t h r o u g h n o n - p r o f

i tc h a r i t a b l e o r g a n i z a t i o n s a n d HUD wo u l d h a v e s t i l l l o s tth e s a me amount of m oney . She al l eges t hatw hen w e compar e w hatactual l yhappene d w i t h w hat c o u ld h a v e h a p p e n e d la w f u lly, th e re w ill b e a f

in d in g o f z e ro lo s s . Feldm an w as a ban kruptcyfraud case w here w e determ i ned that the am ou nt of l oss t he d efen dan thad t o p aym i gh tno ti nclude i m properl ycon ceal ed asset s and rem and ed so th a t th e d istric t co u rt c o u ld d e ter m in e w h e th e r th e c o n c e a led a ss e ts s h o u ld b e p ro p e rly e x e m p te d . Id . at220- 21. Feldm an i s di st i ng uis hab l e. F el dm an d i d n ot pr op erl ydis cl ose 8 hi s as s et s , y eteven i f he ha d, i tm i ghtnothave made a di ffe r ence . I n otherw or ds , the il lega li tyo f F eldm an ’s ac ti o n s w as in q u esti o n , w h ere as h ere , the ill eg ali tyo f B lack ’s act i ons i s pr oven. I n t he i ns t antcas e, B l ack di d notpr oper l ydi s cl os e w ho w as pr ovi di ng7

t he moneyfort he buy er s , as w as l egal l yr equi r ed. T her e i s no ques t i on of the i l l egal i tyof h e r f ra u d a n d a s s u c h , Feldm an is d is tin g u is h a b le . B l ack a l s o cont ends t hatt he amount s obt ai ned byH U D forthe pr oper t i es atthe t i m e of the i ni t i al r es al es w er e notacc ur at e r epr es ent at i ons of thei rval ues as det erm i ned byt he r eal es t at e mar ket . A s a r es ul tof thes e l ow s al e pr i ces , B l ack a l l eges the amountof l os s at t r i but ed t o herfr aud i s over s t at ed. B l ack s peci fi cal l ypoi nt s t o fi ve pr oper t i es as bei ng s ever el yunderval ued byH U D beca us e of the s i gni fi cantr es al e val ue theyr ece i ved aft ert heyw er e s ol d byH U D . I n B F P v. R es ol ut i on Trus tC or p. , the S u p re m e C o u rt h e ld th a t “[ m ]a rk e t v a lu e c a n n o t b e th e c riter io n o f e q u iv a len c e in th e f

o re c lo su re -sa le cont ext . ” 511 U . S. 531, 538 ( 1994) . “‘ [F] ai rm arketval ue’ pr es um es m arketcondi t i ons t hat , bydefi ni t i on, s i m pl ydo notobt ai n i n t he cont extof a f or ced s al e. ” Id . H U D so ld t he hous es as par tof for ecl os ur e s al es ; ther efor e, B l ack’ s al l egat i ons of underval uat i on w i t h respectt o the fai r m arketvalue of the propert i es ar e i rr el evan ti n thi s context . T hese pr oper t i es w er e s ol d as i s , w i t houtt he bene fi tof open mar ketcondi t i ons . T he D i s t r i ct C our tnei t hererr ed i n i m pos i ng t he r es t i tut i on amount of $511, 251. 56 nori n us i ng the sa m e n u m b e r f

o r g u id e lin e c a lcu latio n p u rp o se s b e c a u se th e a m o u n t is a n a c c u ra te re p re s e n ta tio n o f

a c tu a l lo s s . I V. F in a lly , B lac k c o n ten d s th a t u n d e r U .S .S .G . § 5 K 2 .0 , the D istric t C o u rt sh o u ld h a v e g ra n ted a d o w n w a rd d e p a rtu re b e c a u se h e r c o n d u c t (u sin g th e p h o n yg if t lette rs to8

a llo w th e se llers to f

in a n c e th e p u rc h a se s) c o u ld h a v e b e e n leg iti m a te ( u sin g n o n -p ro f it or gani zat i ons t o funnel t he moneyfr om the s el l ert o t he buy er ) . B eca us e ther e w as a l egal m e th o d a v a ilab le w h ich m ig h t h a v e p ro d u c e d th e sa m e re su lt, B lac k a lleg e s s h e sh o u ld notbe hel d as acc ount abl e forherunl aw ful conduct . A ppel l ant ’ s B r . 9. W e do not addr es s t he mer i t s of thi s cont ent i on beca us e “[ w ] e do nothave j ur i s di ct i on t o r evi ew di s cr et i onarydeci s i ons bydi s t r i ctcour t s t o notdepartdow nw ar d. ” U ni t ed Stat es v. V ar gas , 4 7 7 F . 3 d 9 4 , 1 0 3 (3d C ir . 2 0 0 7 ). V . Fort he for goi ng r eas ons , w e w i l l aff i r m the j udgm entof convi ct i on and s ent ence .